Everyone wants affordable housing, especially for the poor. The real question is how to get there. An even more basic question is whether that should be the ultimate goal. Maybe it would be better for everyone to have a truly free market where the poor had better paying jobs, weren’t poor anymore, and the government didn’t have to worry about housing at all. A truly free market would find creative solutions for the poor as well. One of the problems with affordable housing and rent control is how artificial they are. Maybe we should focus on other things like:
- Helping people to buy houses rather than rent
- Economic growth for everyone
- Addiction recovery and other programs that help solve some underlying poverty problems, then let adults make their own housing decisions rather than government
For those who still fall through the cracks, charity seems to work better than government in most cases. Housing is one example of that. It also saddles landlords with unreasonable regulations. Here are two articles that clarify the situation.
Canadian finance expert Lee Friday writes in “Rent Control Is Bad for Renters, but Good for Politicians”:
“However, as William Watson wrote in the Financial Post, “What protection do renters have against unscrupulous landlords? Other landlords—and lots of them.” That is, of course, if other landlords are not dissuaded from entering the market because the government forbids them from charging market prices.”
Reputation markets have been around since time immemorial. They don’t need to be formalised such as with reviews on Yelp, Amazon, eBay and other places. Reputations help to steer consumers away from the bad and towards the good. Regulation isn’t required for that.
The C.D. Howe Institute paper “Gimme Shelter: How High Municipal Housing Charges and Taxes Decrease Housing Supply” helps shed light on how well-intentioned government regulation of the housing market backfires and produces the opposite of the intended effect. While there are many negative effects to government intervention, a few include:
- Building codes that go beyond safety and increase costs that push housing prices up
- Renting apartments is made risky by laws that favor the renter excessively, which disincentivizes investment in housing
- Permitting very low-cost mini-apartments could help to comfortably house the homeless, but there are regulatory disincentives for this
- High municipal housing charges and taxes decrease the housing supply
Affordable housing is important, but maybe we need to look at it a bit differently.